The prices of all major cryptocurrencies plummeted overnight, with analysts claiming a mass sell-off of Bitcoin is to blame.

Bitcoin dropped by almost 10%, before buoying up to hits its current value of just under $11,000.

Litecoin and Ethereum also dropped, with Ripple recording a less dramatic plunge. All the other major cryptocurrencies are also down, with Monero the only of the top 20 biggest virtual coins to show price growth.

Experts are split on whether Bitcoin and its rivals are set to soar to new heights this year or become worthless when the crypto-bubble bursts.

‘The cryptocurrency is up at least 85 percent from lows seen on February 6,’ the website Coindesk wrote.

‘Still, many in the investor community believes the sharp rise from the lows below $6,000 is only a ‘corrective rally’ inside the bigger downtrend.’

Yesterday, Bitcoin hit its highest price point of the year, surging to $11,700 before dropping by more than $1,000. The plunge comes after South Korea stepped back from its tough stance on the virtual coin trade, promising instead to help promote blockchain technology.

‘The whole world is now framing the outline (for cryptocurrency) and therefore (the government) should rather work more on normalisation than increasing regulation,’ said Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS).

Cryptocurrency operators have drawn a new optimism from Choe’s comments, seeing them clearly indicating the government’s co-operation in their plans for self-regulation.

‘Though the government and the industry have not yet reached a full agreement, the fact that the regulator himself made clear the government’s stance on co-operation is a positive sign for the markets,’ said Kim Haw-joon of the Korea Blockchain Association.

Wednesday’s news is a stark reversal of the justice minister’s warnings in January that the government was considering shutting down local cryptocurrency exchanges, throwing the market into turmoil.

Instead, South Korea banned the use of anonymous bank accounts for virtual coin trading as of January 30 to stop cryptocurrencies being used in money laundering and other crimes.